The U.S. Department of Justice and eight states on Friday accused software company RealPage of plotting illegal schemes to undermine competition among landlords and create a monopoly that harms millions of renters.
RealPage “enables landlords to manipulate, distort and undermine market forces,” the Justice Department said in a civil lawsuit filed in U.S. District Court in North Carolina.
“Essentially, RealPage is an algorithmic intermediary that collects, combines and exploits landlords’ competitive information,” the antitrust complaint states.
“And in doing so, it enriches itself and compliant landlords at the expense of tenants who pay excessive prices and at the expense of honest businesses that would otherwise be competing,” the Justice Department alleged.
Attorney General Merrick Garland put it even more clearly in a press conference Friday morning: “Everyone knows that rent is damn high, and we argue that's one of the reasons why.”
With this lawsuit, the government is for the first time accusing a company of attempting to systematically undermine the rules of free competition with the help of mathematical algorithms.
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“Antitrust law will not become obsolete just because competitors find new ways to act together illegally,” Garland said.
“And Americans shouldn't have to pay more rent just because a company found a new way to negotiate with landlords and break the law.”
The attorneys general of North Carolina, California, Colorado, Connecticut, Minnesota, Oregon, Tennessee and Washington are supporting the Justice Department in its lawsuit.
RealPage, owned by private equity firm Thoma Bravo, did not immediately respond to CNBC's request for comment.
The lawsuit, which Garland said was preceded by a nearly two-year investigation, comes in the midst of a U.S. presidential election campaign in which high housing and rental prices have emerged as a central issue.
Democratic candidate Kamala Harris unveiled an economic plan last week that would lower rental costs, in part by cracking down on the companies behind price-fixing tools that allow landlords to collude.
The White House declined to comment on the Justice Department's antitrust lawsuit against RealPage.
However, the newspaper included a statement from national economic adviser Lael Brainard saying that President Joe Biden and Vice President Harris “know that too many Americans feel squeezed by high rents.”
“The Biden-Harris administration has made clear that no one should pay higher prices because of corporate violations of the law and continues to support fair and vigorous enforcement of antitrust laws to prevent illegal collusion,” Brainard said.
— CNBC’s Eamon Javers contributed to this report.
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